2015 (10) TMI 1848 - HC - Customs

Waiver of pre deposit - validity of interim order passed by the tribunal - tribunal granted 50% stay - none of the orders are reasoned orders assigning any reasons for asking the petitioner to pre-deposit 50% of the customs duty - Benefit of CVD - Held that - All that is stated in the orders dismissing the applications for modification is that the Tribunal does not find any merit in the applications; however, the merits of the applications have not been discussed in any of the orders passed by the Tribunal. - Tribunal does not have any powers of review as held in the decisions on which reliance has been placed by the learned counsel for the respective parties; however, as observed by the Bombay High Court in the case of Union of India v. Sir Hurkisondas Norottam Hospital & Medical Research Centre, (2005 (4) TMI 100 - HIGH COURT OF JUDICATURE AT BOMBAY), the Tribunal has powers to rectify its mistake or error and to modify its order. Merely because the petitioner is more vigilant about its right is no reason to non-suit the petitioner on the ground that other similarly situated assessees have not thought it fit to move applications for modification of the order of pre-deposit. When the petitioner has moved an application for modification before the Tribunal and has made out a case of changed circumstances and there is a convention to grant complete waiver of pre-deposit when the matter is referred to the Larger Bench, there was no reason for the Tribunal not to grant similar benefit to the petitioner, that too, without expressing any reason as to why such benefit was not required to be granted. Under the circumstances, the impugned order passed by the Tribunal dismissing the stay application filed by the petitioner as well as the appeal on the ground of non-compliance of the order of pre-deposit cannot be sustained. - Ordinarily, while setting aside the order passed by the Tribunal, this court would remand the matter to the Tribunal for deciding the matter afresh, however, considering the fact that in the case of similarly situated assessees, the Tribunal has already granted complete waiver of pre-deposit and it is a convention to grant waiver of pre-deposit in case the matter is referred to the Larger Bench, no fruitful purpose would be served in remanding the matters to the Tribunal. - Stay granted.

Issues Involved:
1. Classification of imported coal as steam coal versus bituminous coal.
2. Demand for differential duty, interest, and penalties.
3. Tribunal's order for pre-deposit of 50% of the customs duty.
4. Petitioner's application for modification of the pre-deposit order.
5. Tribunal's rejection of the modification application.
6. Convention of waiver of pre-deposit when the matter is referred to a Larger Bench.
7. Tribunal's powers to review or modify its orders.

Detailed Analysis:

1. Classification of Imported Coal:
The petitioner, a company engaged in manufacturing dyes and chemicals, imported Indonesian steam coal for use in its factories. The customs authorities issued show cause notices, reclassifying the steam coal as bituminous coal, which led to a demand for differential duty with interest and penalties. The petitioner contested this reclassification.

2. Demand for Differential Duty, Interest, and Penalties:
The customs authorities demanded a differential duty of Rs. 52,71,719/- for Unit-I and Rs. 56,46,961/- for Unit-2, along with penalties of Rs. 8,00,000/- and Rs. 8,50,000/- respectively. The petitioner appealed against these demands to the Customs, Excise and Service Tax Appellate Tribunal (Appellate Tribunal).

3. Tribunal's Order for Pre-Deposit of 50% of the Customs Duty:
The Appellate Tribunal directed the petitioner to deposit 50% of the confirmed customs duty as a condition for staying the recovery, citing similar orders in identical cases. The petitioner was required to report compliance by 24.11.2014.

4. Petitioner's Application for Modification of the Pre-Deposit Order:
The petitioner filed a modification application on 26.11.2014, arguing that the Chennai Bench of the CESTAT had referred the classification issue to a Larger Bench due to differing opinions. The petitioner sought a waiver of the pre-deposit and an unconditional stay on the recovery of customs duty, interest, and penalties.

5. Tribunal's Rejection of the Modification Application:
The Tribunal dismissed the modification application on 1.12.2014, finding no reason to alter its earlier order. The petitioner was granted four weeks to comply with the pre-deposit order. The petitioner filed another modification application, which was also dismissed by the Tribunal on 15.1.2015, leading to the dismissal of the appeals for non-compliance.

6. Convention of Waiver of Pre-Deposit When Referred to a Larger Bench:
The petitioner argued that it is a convention to waive pre-deposit when a matter is referred to a Larger Bench, as evidenced by the Tribunal's order in the case of M/s. Rainbow Papers Ltd. The petitioner contended that the Tribunal's refusal to grant a similar waiver was unjustified.

7. Tribunal's Powers to Review or Modify Its Orders:
The petitioner cited various legal precedents to argue that the Tribunal has the power to rectify mistakes or errors and modify its orders, even if it does not have the power to review. The petitioner emphasized that the change in circumstances, such as the referral of the classification issue to a Larger Bench, warranted a modification of the pre-deposit order.

Court's Decision:
The court found that the Tribunal's orders lacked reasoning and failed to address the merits of the modification applications. The court noted that there is a convention to grant waiver of pre-deposit when a matter is referred to a Larger Bench, and the Tribunal had followed this practice in similar cases. The court held that the Tribunal's dismissal of the modification applications without providing reasons was unjustified.

Conclusion:
The court quashed the Tribunal's orders dated 15.1.2015 and restored the petitioner's appeals. The court modified the Tribunal's order dated 29.9.2014, granting waiver of pre-deposit of the duty, interest, and penalties until the disposal of the appeals. The petitions were allowed with no order as to costs.

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